- Posted by LiSA
- On March 20, 2015
- 0 Comments
- financial education, financial literacy, LiSA Initiative
This is the third article in a six-part series examining America’s growing Financial Literacy crisis and ways to combat it. The series’ goal is to drive awareness of the problem; encourage dialogue among diverse communities, corporate entities, and constituencies; and lead to the creation of educational opportunities and programs that can help people achieve a better financial future.
TEACH YOUR CHILDREN WELL
LiSA Encourages Parents to Prepare the Next Generation of Consumers
The Organization for Economic Cooperation and Development (OECD) released findings last year of a test given to 29,000 15-year-olds in 18 OECD countries or partner economies. Teens living in Shanghai, China scored the highest by a wide margin.1
The test focused on financial literacy. Students had to identify and define common financial terms and concepts. They also had to show an understanding of how these things would have practical use in their lives.
U.S. teenagers scored squarely in the middle of the pack. They landed just below Latvia and slightly above Russia.
America’s mediocre performance should come as no surprise. Money and finances are rarely discussed in this country’s homes or studied in schools. In fact, currently, there are only four U.S. states – Missouri, Tennessee, Utah, and Virginia – that require high school students to take a personal finance course to graduate.2
At LiSA Initiative, we see these findings as an opportunity for parents to change their children’s future by helping them become financially literate.
We believe parents can make a difference by preparing them to become responsible and smart adult consumers. The work they put in now to ensure their children have a basic understanding of finances and how money works will affect not only on their kids’ future, but that of the American economy, as well.
So, in addition to applying pressure to state and local school boards to add personal finance classes to school curriculums, mothers and fathers need to begin having conversations with their kids about a wide range of age-appropriate financial topics. Whether it’s across dining room tables, sitting in carpool lanes, while tossing a football, or simply in those quiet moments when preparing for bed, parents should begin talking to their children about money.
It’s never too early or too late to begin a conversation about personal finances with your kids. The younger your child is when you start instilling good financial behaviors, the better.
Children begin learning about money in pre-school. You can use playtime and games to encourage financial learning even in children as young as 2 and 3 years old. Your toddler may not know how much a penny or dime is worth, but you can teach him to recognize the former by its brown color or the latter by its smaller size.3 By playing “store” with your daughter, you can plant the seed that the things we need, groceries for instance, must be paid for with money.
Find ways for your younger elementary school-aged daughter or son to earn money. Have your son help out with chores around the house. Or, have your daughter not only help you clip coupons, but go with you to the grocery store and match the coupons with the items on sale.
Initially, she can keep her earnings in a piggy bank, but you should take her to the local bank to open a savings account in her name. As she deposits what she makes each month, she can learn about the role banks play in our economy and the banking services that she may use throughout her life.
The elementary years are when you’ll help your son or daughter begin learning basic concepts that will form a foundation for continuing financial education. You can introduce such concepts as paying yourself first, a need versus a want, discipline and patience in saving, how credit works, and much more.
As children reach their teen-aged years, the lessons will naturally focus on more complex financial concepts. This is the time when you need to introduce information about investing, including why and how it’s done, the risks and benefits, and more. Select a stock, such as Mattel® or Sony®, for you and your son to follow online. This is a great way for him to see the day-to-day market fluctuations and how world events may impact a stock’s value, for example.
Stored value cards are a great way to teach your daughter how to live on a budget. Parents can load these cards, offered by major credit card companies, with a specific amount of money. Your daughter knows the amount available and must learn to live within her means. Introduce the concept of good debt, such as a home mortgage or car loan, and share with her that she should only carry the amount of debt on a credit card than she can comfortably pay off each month.
During the high school years, teens often establish their own businesses – mowing lawns, babysitting, dog walking, or housesitting. This is an excellent opportunity to introduce entrepreneurial concepts to them, such as explaining how to establish and run a small business.
Finally, if you have daughters, you may need to give them an additional pep talk. A recent report found that a “gender bias in math grades given to girls and boys at the elementary school level” still exists today.4 The study suggested that girls receive lower scores based on their gender and are being discouraged from taking “higher levels of math and science” in school. If a girl thinks she can’t do math, she’ll stop trying. We need to eliminate any and all barriers to learning.Remind your daughters every day that they are smart and if they want to, they can do anything. That’s true for our sons, as well. If we provide our children with a solid, financial education, doors to opportunities will be thrown open wide for them. Financial literacy is a gift that can never be taken away from them. It’s their ticket to the world.
UP NEXT: MARCH 27, 2015 – Financial Literacy and At Risk Communities
1 Simone Pathe. “U. S. teens rank between Latvia and Russia on financial literacy, far below Shanghai.” PBS NewsHour. Making Sen$E. July 10, 2014, 5:58 p.m. EDT. http://to.pbs.org/1qpikyb
2 Pamela Prah. “States Lag at Educating Students about Personal Finance.” The Pew Charitable Trusts/Research & Analysis/State Line. Mar. 4, 2014. http://bit.ly/1BP27f5
3 Anna Attkisson. “Teaching Kids about Money: An Age-by-Age Guide.” Parents.com > Parenting > Money > Family Finances. http://bit.ly/1lW8oz3
4 Linda Carroll. “Teacher bias may help discourage girls from math, study finds.” Today.com > Today Parents. Mar. 9,2015 at 3:11 p.m. EST. http://on.today.com/1NDQLhM